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tv   Bloomberg Markets Americas  Bloomberg  March 13, 2017 10:00am-12:01pm EDT

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markets." vonnie: we take you from new york to london and cover stories out of israel, the netherlands, and china. here are the top stories we are following on bloomberg and around the world. it is the beginning of a very big week for central banks globally. expected fromre the federal reserve, the bank of england, and the bank of japan. whether be any surprises for investors? politics, a new twist in the brexit battle as nicola sturgeon lays out steps for a second independence vote. how will that action complicate things as the u.k. lurches towards triggering article 50? annie: intel is buying israeli company for $15 billion. new it help intel find markets for self driving cars?
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lots of questions to answer today, but the first is, we are talking about how stocks are doing. in -- julie: are stocks are in a holding pattern. there is not much uncertainty surrounding interest rate increase on that date, but perhaps beyond. also, central-bank meetings and other nations as well. we are not seeing much movement beyond that. last week was a down week for stocks, the first in seven. now, in this stall pattern, ever since the records that were reached on march 1, but there is a lot of movement when it comes mobileye beingl, acquired by intel. it is a 30% premium. on friday, the shares trading up by nearly 30% as intel falls by 1.5%. everis intel's largest acquisition, and the largest ever of an israeli technology company.
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mobileye sells software to power autonomous driving. most of this revenues at this point, or the biggest slice of this point, comes from the german auto consortium, bmw and daimler. and their various autonomous driving efforts. we are not seeing just mobileye rise. we are seeing other auto services companies also on the rise. delphi rising. , which traditionally has been a graphics chip maker, which has been pushing into the automotive industry. those shares rising this morning. outside what is going on with stocks, take a look at bonds. we are seeing the incredible route continuing, with a little paws on friday. we have got just a basis point increase in yields this morning. 2.59% on the 10 year. if you look at the bloomberg, we have seen this big reset and expectations for that rate increase, coming just a couple days from now. this is the economists we
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surveyed. the dotted line here is for the path of interest rate increases. the yellow line is what economists predicted about a month ago. the blue line is what they are predicting now. we have had this reset not just for wednesday, but for the remainder of the year, for the fed to be more aggressive. traders, investors, economists -- everybody will be looking for signs to see whether that is the case. mark: we certainly will. stocks are up here for a fourth consecutive day. snb, andus, boj, fed, of course the -- did i say the boe? a massively for central banks. we are up for a fourth day, led by visit resources. sterling is gaining for a second day, the house of commons voting today on whether to accept the attachments by the house of lords to theresa may's draft bill. banks are split on whether
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triggering article 50 is already sterling.baked into bank of america's preferred strategy is to bet on greater swings in sterling rather than its direction. morgan stanley, more sanguine, and thanks targeting article 50 should not come as a major surprise. a possibility of another scottish referendum. pull-ups and we'll be chatting about that in a few seconds. an interesting chart showing the u.k. 10 year yield, the white line, which is at roughly one point 23%, below the highs of 1.5% a month or so ago, way above the lows of 50 basis points. 30 day volatility is low, around the level before the brexit vote. we are seeing movement in the fixed income market. we are not seeing a very volatile fixed income market. big news today for hsbc. it named insurance executive mark tucker to succeed the chairman.
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the ceo of aia group, former head of prudential, will take the post october 3. a big task, finding a successor to chief executive officer stuart gulliver. shares are up. it is the best performer post-brexit among u.k. banks. vonnie: i am going to be speaking about that everything a little later on in the program. as you said, it is a huge week for central banks. four of them around the world making decisions. we will get the latest federal reserve rate decision on wednesday. past monetary decisions due from the bank of japan. the bank of england and the swiss national bank. european politics eating up from the brexit battle to the dutch election. joining us is paul dobson, the head of the bloomberg markets live team. you can follow all of their writing at mliv-go. which of the central banks have the opportunity to surprise markets? good question.
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so much is baked in already for all of these central-bank meanings. it will be interesting to see where we get the move. obviously, the fed is the one with the biggest global impact. we are going to be watching to see what information they give us about the future, as well as the decision itself today. markets are more or less priced for three hikes this year. could defend even be more hawkish? -- could the fed be even more hawkish? vonnie: if there is a change in the medium dots -- we will be looking at a new dot plot on wednesday. the median dots for next year or the year after, does that move markets, or is it just something to be noted and put away for a little later on in the year? paul: i think we had a very big turnaround in market expectations in the last month. remember, we have gotten to new highs in terms of treasury yields. and the question is whether that kind of becomes more cemented, whether this is a genuine paradigm shift and do something
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that can push us up considerably higher than where we have been. that is what we will be watching for. look at the 10 year yield. can it go much above the 60's we are in at the moment? how much do you think is in the engine? mark: boe is being overshadowed by politics. interesting that politics is moving starling, sterling up by a second day. so sturgeon into the mix, the and the big house of commons for later. but sterling is rising for a second day. is sterling no longer a political currency? paul: really interesting. if it doesn't move today, i think that is the case of sterling having a little bit of a poll after some really big downs in the last six weeks or so. i think there is so much, where trade is considered at the moment. breaks it is two years off. the scottish referendum. long-termfor the very
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. we have medium risks. i think what you have to think about as a strategist looking at sterling, or a traitor looking at sterling, is, how is brexit negotiations going to play out? when is the moment of peak panic going to be? often, we get a rising amount of risk until it gets such upwind that the market forces policy officials to do something, or the market readjusts. i would say that comes before we get to the two years of brexit. that is something to watch out for in the interim. mark: and the boe meeting itself? paul: it is all being priced out in terms of the boe. there were hopes they would immediately after brexit, stop qe, everything corporate bonds. but the data is more regular in the u.k. consumer spending down. there are more worries on the horizon. i think that has flattened out the market expectations, and the curve.
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i think people are looking for the boe to be on hold for a considerable time. vonnie: what is the objective of the boj, the boj governor? does he just want to keep he havesteered, or does a policy statement he wants to make? we haveoking at japan, suffered this yield cap now. we are aiming for around 0% on the 10 year. and that really is the key pivot point around which markets seem to be gyrating at the moment. that is one thing. on the other hand, we have been looking at the pace of qe the doj has been doing, and if you extrapolate what it has been doing in the short-term, it would be falling short of the purchases they would be making. a subtle taper going on. mark: paul johnson, what a week it is going to be. head of the bloomberg markets live team. you can follow that mliv-go.
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what a fantastic function. vonnie: it is. the atlanta federal reserve has selected a new president. that news out in the last minutes. steve matthew is in atlanta with the details on rafael bostick. tell ushat can you about this new atlanta fed take officeo will in two months? steve: he will start in june. i would say the big headline is, there have been more than 100 regional fed presidents over the last 100 years. rafael bostick will be the first african-american or black president of a regional fed bank in that century. it is pretty remarkable to think about, that we have gone that long without -- there has never been a black or latino fed president. janet yellen goes before congress. she is often asked about
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diversity. this has been a real omission. is going to be the first black president, which is really important in atlanta, which is a city where civil rights is very important. that, he is an outstanding economist. specialtyomist with a in housing. he is a university of southern california professor right now. starting june. vonnie: long in the coming. tell us a little bit about the atlanta fed tradition and history. become a bostic voter? steve: he will become a voter next year. the atlanta fed has been hawkish at sometimes and dovish at sometimes. dennis lockhart, who retired in february, and has held the position the last 10 years, has
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been considered something of a moderate. some people would consider him to have been a bellwether. we do not really know what bostic's views are on monetary policy. however, if you read his writings, he is very concerned about poor people. he is concerned about communities that are low income communities. he is concerned about racism and inequality. at hud, he was involved in implementing a rule that prevented discrimination against gays and lesbians. so i think some people will look at his record and presume that he will be more dovish, although that remains to be seen. we do not know what his position will be on monetary policy. vonnie: pretty amazing applications for the federal reserve. steve reporting from atlanta. he sure to watch our special report.
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wednesday, it starts 1:00 p.m. new york time, 5:00 p.m. london time. let's check in on the first word news, with emma chandra. emma: in the u.s., federal -- president trump is going to detroit to talk about jobs and the auto industry. what has officials told the detroit news the president will and with auto executives unions. president trump will talk about keeping america's jobs from being outsourced overseas. there is a report that president trump will host chinese president xi jinping at mar-a-lago in florida. calls it a lowering of the temperature summit. the middle east, 2016 was the worst year yet for syrian children, with more than 650 of them killed in syria's civil war, according to the united nations child relief agency. the report said there was no let up to attacks on schools, hospitals, and playgrounds.
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the second strike in four days has brought air travel in berlin to a standstill. almost all flights to and from the city have been canceled. 2000 ground employees are on a two day strike for higher pay. hours a day,4 powered by more than 2600 journalists and analysts in more than 120 countries. i am emma chandra. this is bloomberg. mark: coming up, last week, oil breaking below $50 a barrel. where is it going to go next? ♪
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vonnie: live from london and new york, i am vonnie quinn with mark. this is "bloomberg markets."
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we are looking at oil. it has been down before -- below $49 a barrel. it boost in activity, countering opec efforts to bring a global glut. joining us from the cme is joe cusick. there are plenty of reasons why oil should be trading higher, including outages in libya. why is it trading below $48 a barrel this morning? joe: well, just take a look at some of the headlines in the last week. first of all, we found the largest oil field in 30 years here in the u.s. yes, it is going to take three years, but that is the psychological bear. line is, we have had continued inventories at record highs. we are not pulling those inventories fast enough. the third thing is that we are not seeing some of the reforms that we are waiting for from the president-elect here. that is continuing this glut here.
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are seeing that in the united states and globally. vonnie: the conditions that kept oil on the slow grind higher are still in place. many of the things you mentioned have been the case for a while. why is the oil market taking notice now? cap plans are not coming into practice yet. why is the oil market more concerned? joe: the oil market is waiting for the global demand, and seeing what the catalyst is for the next leg of the global demand. we are seeing the commodity markets are a lot like the equity markets right now. they are stuck. we are waiting for what was hoped and promised to become actual actions and policies. we will see that . leg. will see that next the pmi numbers have been impressive, but we are seeing things like, in china, the teapots, looking to export their product. then, we are not seeing
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next leg of the catalyst, other than what has transpired with the elections here in the united states, into reality. i think the markets have tapered off. i think oil is going to stay probably at this level for the foreseeable future, until we see those catalysts play out. beene: the market has impressively long periods is this shakeout some of the longs? are we getting into more of a balanced range? commitment of traders report which came out before the pullback had net long specs for noncommercial and commercial, over a half a million contracts, on the futures and options. we are going to see how that plays out. we will watch the commitment of traders this week. there is an anticipation that there was a big shakeout, but i think there is a nice support level. watch the 47.70 mark as the next pivot. vonnie: joe cusick of the cusick group with today's futures in focus. mark: still ahead, intel kicking
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off merger monday with a $15 billion purchase. find out whether tech giant is scooping up israel's mobileye. ♪
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mark: this is "bloomberg markets." i am mark barton in london. vonnie: in new york, i am vonnie quinn. in a move to dominate technology intellf driving cars, snapped up mobileye in a deal valued at $15 billion. the israeli startup trading up a whopping 29%. cory johnson is up early with the story, or is delaying his five-mile run today. tell us about the price tag for mobileye. is that reasonable? cory: it is insane. this is a company with $350 million in revenues. paying $15 billion for it.
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it is a profitable company. it is no snapchat. but they are paying through the nose for this company because it is a leader in this emerging field of automated driving, self driving cars. sort of the fantasy this might lead to. when intel looks at this deal -- brian wrote an entry -- amino to the staff of intel. he said, this is going to be a $70 billion market, and we want to be a leader. but this thing is going out at 137 times earnings. it is a very high price tag for this company. but that is what intel thinks it has got to do to jumpstart their efforts here. interestingly, intel has a big automated driving business. and a software business and hardware business. they are moving the headquarters of that to israel, to mobileye. they are going to work with mobileye from mobileye headquarters. intel is not going to take over management of the business.
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they are going to operate as separate businesses. even after the merger, they are going to work together. it is intel helping to do for the vehicle what it once did for the pc? is it hoping to be in every single maker? is that even realistic? cory: i think it is, but i do not think it will emerge as a -- the valueel is within the pc was in the single cpu, the most expensive part, the most extensive semiconductor, literally the most expensive part of a personal computer was the semiconductor at the center of a single processing unit. that was where intel focused its efforts. the intel of today seems to have a different focus, where they are willing to accept lower margins to get more of the semiconductor content of the vehicle. even as they are focusing on the most expensive and highest margin parts of the business, they seem willing to be in lots of other sensors and chips within the car. the history of semiconductors is
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that lots of different components that require different chips eventually get merged into the cpu. that may be the case in car someday in the future. but i think intel right now wants to be everywhere in the lots ofduct and control the percentage of the semiconductor content in vehicles. mark: corey, just tell us about the future of autonomous driving. everyone is desperate to get into this space. who is going to be left standing at the end? time, what weover are going to see is, we are going to see a lot of companies, as content gets more consolidated, and the history of something we design -- we have seen new companies like mobileye emerge. i'm sure we will see that. there is a lot of competition in the space. there is no country in the world with technology like intel. one of the fascinating things about technology is that big companies, big companies tend to dominate every aspect of semiconductors. there is not a second database company that is close to oracle.
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there is not a secondary search company close to google. in semiconductors, there is no company quite like intel. intel is so much bigger than all of its competitors, when it focuses on the new market, it comes with a great advantage. we can expect that to continue. vonnie: cory johnson, thank you from bloomberg news in san francisco, bloomberg technology. be sure to catch his interview with the intel ceo, coming up at at 12:45 eastern, 4:45 london time. you do not want to miss it. this is bloomberg. ♪ live-stream your favorite sport
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at the airport. binge dvr'd shows while painting your toes. on demand laughs during long bubble baths. tv everywhere is awesome. the all-new xfinity stream app. xfinity. the future of awesome. ♪ vonnie: live from bloomberg world headquarters in new york and london, i am vonnie quinn. mark: and i am mark barton. this is "bloomberg markets."
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and i chandra has more in new york. emma: germany's chancellor angela merkel will explain her free trade stance with president trump and she meets with him at the white house tomorrow. she says protectionism is not the path to global growth. president will also discuss vocational training. and you poll says that 55% of french people are afraid of the far right handed it marine le pen. a poll shows that she is virtually tied with independent candidate. he is expected to beat the pen in therunoff -- le pen runoff. in a week, the central bank -- it was under the bank's target. it it leads to speculation that interest rates will be cut again next month good in the u.s., the north east is bracing for a late
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winter blizzard. the storm to drop up to 18 inches of snow in new york city. it extends all the way up new england. the snow is likely to start falling later tonight. global news 24 hours a day, powered by 2600 journalists and analysts in more than 120 countries. i and emma chandra. this is bloomberg. vonnie: wall street former top cop is looking for a new job. arara was fired from his federal prosecutor position, his words,. he is been involved in a number of sensitive investigations including one involving budget bank. where does this leave wall street? i want to bring in kelly and william. we will start with you. what are some these extending cases that are high profile? onsome are very much focused
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deutsche bank. another one involves ameritrade out of russia. it has been long going. we are eager to see a conclusion to that one. there is also a case involving fox news. that involves some harassment charges, and whether the company had disclosed everything appropriately in those cases. those are very much high profile -- high profile. that includes something along with diane pharmaceutical which is also in the limelight. can the deputy who takes over continue those investigations? can he have some type of influence over the outcome? >> he certainly could. he is a career prosecutor who is close to preet. the bigger question is who will be the permanent replacement. that will be someone very different. mark: what is the reaction on wall street? is it rubbing his hands with glee? asked not necessarily. wall street feared preet.
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but the big wall street funds came out fine. he had his specialty in insider trading. he was able to get quite a bit of convictions on that. he had a setback with the court degraded theort of ability to convict certain types of insider trading cases. so, not necessarily. he was a fairly well liked. wall street did not love him, but that does not necessarily mean they are happy he is leaving. innie: he had some successes his world. mark was one sort of black on his record in terms of enforcement. that no one accident to jail for the financial crisis. >> you could argue that for every u.s. attorney in the country. i do not think there is a prosecutor in the federal
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government who was working on those cases who did not say they did not try very hard to get those convictions. they were difficult cases. obviously, what we were doing at that time was very complicated and confusing. they were not really sure what crimes were committed at that point. mark: whitney, who will replace him? >> the name the has circulated the most is mike mckay c. he is very close to rudy giuliani, the former mayor of new york who has been an advisor to trump. his name has come up repeatedly. interesting thing is that there is a fox news investigation going on. he could be conflicted out and have to the recuse himself. you might be a consideration instead for the brooklyn office instead of manhattan. another name has come up as well. i'm not sure what will play out here, but mckay's he is in the mix and up for discussion. vonnie: two democrats have any sort of state here?
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name, anduld float a that is not the way it is going to go. it is going to be a republican-controlled process. vonnie: keri, -- >> that is a question we have been trying to figure out since sessions was appointed attorney general. it is not clear what sort of cases they are going to go after. the type of cases that preet -- some of those could go in some of them could stay. the political corruption cases will likely drop down. they were sort of the crowning of his career. it is tough to say whether the new administration is going to really care about these cases. vonnie: the ameritrade deal also involves people in maine justice. >> you could take some of these big wall street cases and link
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them down to washington. then, these offices were not have any power. vonnie: who would make that decision? >> the main justice under session would make that decision. mark: he said that in november he was asked to stay. obviously, things have changed. what happened between november and this weekend? >> it is hard to say this with a straight face to some degree, but things have become more divisive. there was a point when schumer was talking about working together. preet's name came up. things have deteriorated to such a degree. pushed by hisn supporters to really focus and go anti-trump. trump was doing the same thing. the wild card in all of this are the investigations that are continuing around the campaign with the contact with russia and trump eight. the has made trump very upset with the justice department as it is currently working.
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he wants to stop it. vonnie: what could he do next? >> this is a big question with preet. a live people speculate he could run for political office. in 2014, he said he had no interest in doing that now or ever. however, he is a good candidate for the mayor or governor of new york. i think there are a lot of people who are hoping he will go down that path. it will be interesting to see how he takes this firing and turns and uses it to his advantage. it is soell us what unusual for an attorney to say he was fired and i have stepped down when he was asked to. >> honestly, he is a political appointee. there is a history of cleaning house when it so when new comes in charge. presidentse, because trump had said he could stay on it was very surprising. the everyone is asking question if he was involved in anything involving the trump associates that may have prevented him from resigning.
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principle resign over or existing investigations? he tweeted over the weekend that he knows how the moreland position feels now. will he testify before congress? i do not know. vonnie: i want to thank you both. thank you both for joining us. coming up, oil flirting with $49 a barrel. u.s. production undermines opec cuts. how low could crude go? this is bloomberg. ♪
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♪ you are watching bloomberg. i am vonnie claim. mark: and i am mark artan. this is your global business report. turning bullish on china. a look at goldman sachs is outlook for the country's equity shares. vonnie: harley davidson is following in the footsteps of country such as apple and coca-cola. a look at with the motorcycle maker is doing to raise money. mark: in today's quick take, a look at fracking. it is a look to make the u.s. more energy independent, but it is also causing earthquakes and pollution. is it worth it? vonnie: mark tucker will be the new executive chairman of h s.e.c..
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hsbc.l start at his main task will be to find a successor to the ceo stuart gulliver. goldman sachs has become the latest, major bait -- hank to join the russian and chinese stocks. from the bank analyst today forecast that almost 25% gains for this year. the china gauge is up 11% already. australia's foreign minister is dismissing the possibility of a u.s.-top china trade war. trade war.na she does say that china needs to do more on the global stage. she spoke with bloomberg in singapore. >> it is important to china for economic growth. it will become strategically more important. the question is whether china
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will be irresponsible, global player. the has yet to be seen. -- will be a responsible global player. harley davidson is considering its first bond deal outside of the u.s. harley davidson will meet with investors in australia and singapore later this month. other big companies like apple and coca-cola have specific investors. -- pacific investors. vonnie: time for a bloomberg quick take. gasking to extract oil and has produced a flood of new energy in the u.s. and canada. it has lowered fuel prices and created thousands of jobs. it has helped the two countries lessen their independent -- their dependence on foreign energy and coal. leadingame time, it is to increased in earthquakes and greenhouse gas emissions. by there be a balance
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reducing the effect through technology and regulation? or does fracking represent a threat so grave it must be banned? fracking was largely responsible for a 54% increase for the u.s. production of oil and national gas. fracking generates a little more than half the oil and natural gas in u.s. cities today. fracking has yet to take hold outside of north america. environmental concerns have led to bans in several european countries. also in canada. the first commercial use of fracking was in 1949 in oklahoma. technique involves forcing water and sand with chemicals into a well to create fissures in shale rock so that oil or gas trapped inside could escape. horizontal drilling came in the
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early 1980's. it provided access to shallow layers of underground shale. has led to the abandonment of coal and the driving down of energy-related carbon emissions. dependence oned persian gulf oil. environmental supporters -- a say that the environment affects could be limited. theargument is that abundance of fossil fuels that fracking produces would be a curse in the end, because it future alternatives. you can find out more if you click on the bloomberg. that is your global business report. you can head over to bloomberg.com for more stories. mark: crude oil flirting with $49 a barrel. u.s. oil production of setting opec production cuts. joining us now for more is
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-- javier. optimism burst or faded completely? >> we still have some months ago. there is going to be in review at the end of the month. they are meeting today and again in late may. .t is too early to say certainly, the optimism of the last few weeks has evaporated. think for two reasons. on the one hand, inventory is coming down much lower than anyone had suspected. certainly it is lower than what opec had suspected. saudi arabia acknowledge that last week. the second part is that oil production is coming up outside of opec. that is not just u.s. shale but other parts of the world. mark: you were in houston last
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week. shale billionaire harold had said that the industry could kill the oil market if companies keep increasing spending. what was the sentiment like? >> the sentiment in houston was very bullish. everyone was talking about increasing spending and bringing up the number of operations. in particular, the new shale area in western texas. certainly, every company including harold hamm's company is increasing production by 70%. i got a sense that the money is coming back into shale. the other question at that houston conference -- every executive spoke or gave an interview to talk about lowering costs and lowering the breakeven price. at the end of the day,
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production is going to keep coming up. that is bad news for opec. vonnie: javier are, at what point does opec have to make some new agreements? do some companies have to be more compliant than they already are? >> we have this opec meeting coming in the anna. it is going to be -- in vienna. it is going to be a meeting in which opec maker forget about the deal and production cuts. most ministers i have spoke to feel that the deal another sixcinded months. moment the real critical for opec is going to come at the end of this year. to send it the deal another six months back into 2018. whether they do that or we go back to what we have seen two years ago that it is a price war
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and a war for market share. i think it is not looking particularly good for opec at the moment. vonnie: there was some concern of political instability happening in libya. that make a material difference to the price of oil? >> it does not. it is too small. if libya was going down completely, and we were to lose -- that wouldtry be material for the market. but even hundred barrels a day will not turn around the markets. --re in mind, we believe bear in mind that we believe that the u.s. shale production is growing month after month. weeks the for a few oil from libya is not quite hurt
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too much. mark: what is the point for shall right now? a year ago, you could have asked executives what is your breakeven price for shale. they would have said six dollars or $70. now, they are saying lower. mark: it says the oil price could go lower. >> yes, i think we see the oil price going lower. compliance. everyone seemed to be clapping their hands. the longer this deal goes on, the more difficult. and how long can opec and non-opec stay compliant? >> the question is how long saudi arabia is willing to carry along with this compliance. for now, it looks fantastic. we have 100% compliance because the saudis are capping a lot. as far as initial compliance, forward. have broke
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they are not actual cuts. i think the difficult bit comes in the second half of the year when you get not the help of -- in the summer, typically activity increases. it will be difficult for russia to comply. , thank you for joining us. he covers energy and commodities for us. still ahead, we are looking at american industry. the plan for emerging markets. it is vonnie quinn versus mark barton. in on wednesday for the full coverage on the fed decision. that coverage of janet yellen will start at 1:00 eastern time.
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former federal reserve vice chair alan blinder. what a week. this is bloomberg. ♪
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♪ vonnie: --julie: welcome back to "bloomberg markets." vonnieudging mark versus b in the battle of the charts. i am very excited for this. vonnie will kick it off for us. vonnie: i have never battled mark before. he is a bit of a nemesis. let me tell you that. : green, but great charts and battles i am not so sure. this one is very interesting from the u.s. labor market. we did get some statistics in the job report about how retail
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hasn't dropped back a little bit thanks to the holiday jobs going away. there are more manufacturing and construction jobs. broadly, the breadth of hiring is at the highest now since back in 2015. you can see that from these green circles. it is very interesting, because it comes from the bureau of labor statistics. it is government data. you can see that chart at 6736. wonderful, vonnie. and i love that chart. it is at about -- it is all about the fomc this week. the question is how it will cope if the fed raises rates likely this week. the yellow line is the em currencies. the white line is the stock index. look back at the years before 2017. we saw emerging market currencies and stocks rise.
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in 2015 and 2016, the fed hike in september. the stocks initially fell, and they saw an upside initially of 27% and 11% initially. also, emerging nation currencies has outperformed u.s. corporate bonds. see what i mean? conventionalle wisdom that rising rates are bad for emerging markets. i will give it to mark. vonnie: i actually agree with you. more markets next.
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mark: i am mark barton. vonnie: in new york, i am a vonnie quinn. you are watching "bloomberg markets." ♪
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mark: we will take you from new york to london in the next hour plus covering stories at washington, sir, and amsterdam. here other top stories we are following on the bloomberg today and around the world. policy is dominating much of the market. a new push to start its independence may start the triggering of article 50. the dollar is headed for a slowdown. we will discuss whether a warning sign from the 16th century may indicate tough times ahead for the greenback. if united states, the congressional budget office is expected to start marking up the gop plan to replace the affordable care act. we would hear from former cbo director.
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let's have a check on trading now in the u.s. we want to get over to julie hyman who has the latest. e: looking at what is going on with u.s. stocks, we have sideways movement here given that we haven't central-bank meetings this week. -- we have central-bank meetings this week. the bias is a little bit to the downside as we have the dow off 38/ . if you look at some of the big decliners today, they are following some of the different regions. a bunch our communication. it will be exiting the s&p 500 as it does it periodic re-organizing of which companies are in and out. is raising its forecast. on the flipside, it is announcing a secondary offering. that appears to be pressuring
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shares. gamestop is being downgraded. those shares are following -- falling as a result. we continue to watch oreo today. it is a bit of a downside bias. we have been watching volatility which has been lagging in the stock market. if you look at oil prices, we had been seeing some declining. we have also been seeing the vixx not moving very much. where is the volatility? it is in the oil prices. take a look at the bloomberg. price in aqual here. itsso long ago, it had highest close going all the way back to july of 2016. we had that big pullback we have been talking about over the past week or so on and will supplies in the u.s.. at the same time, volatility which has been at its lowest since 2014 has really spiked up.
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across different asset classes, we haven't seen this -- we have seen this summer volatility. in oil, it is starting to come up once again, mark. mark: interesting to see basic resources at the top of the pile. they have come down about 8% as an industry group from the highs of a month or so ago. best showing you the reflation trade has run out of steam. we are up for the fourth day. bovis predicting a take over from a competitor. earlier dismissing an offer. it is an ongoing discussion. delivered said on sunday it .ffered eight pounds 86 delivered says it's sure offer would give -- they say it would give their investors combined --
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beaufort looking for a new cheap executive after david ritchie step down. if you are homes this year as it slows work to correct customer service issues. redrow maintained in initial approach. that was when bovis share price was seven price 70 -- seven pound 74. up 10.5% today. the other piece of m&a today involves around a mac and foster. shares rising 23% earlier. that is the biggest gain since 1995. to buyd group offering the group. it comes after several days of pressure on the prospect of service companies in the energy industry. is taking over and putting pressure on prices. it is putting pressure on the
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prospects of these type of energy services companies. really quickly, a bit of data today. interesting data on house prices. yes, house prices are rising in the fastest pace since the year last month. high-value london property showing sign of a rebound according to active data. -- price of property of 2.6% 0.6%. vonnie: turning to u.s. politics, president donald trump is set to hold a listening session at the white house over they health care act. from thes congressional budget office working to figure out the cost for the replacement to obamacare. kevin joins me now. me what we know from
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the trump administration and his meeting with health care representatives today. who are these people? weekend, iover the have been talking with some conservative eight from the house freedom caucus who are incredibly concerned about how much paul ryan's health care plan is going to cost. later this week, the nonpartisan congressional budget office will come out with their score for just how much this would cost. if they do not get a neutral score, that means republicans will not be able to revert a filibuster in the senate. as a result, they are going to need the administration and speaker ryan -- they are going to need to win over people like rand paul. people who have concerns over how much this my cost. as we are talking, resin trump is meeting with top pharmaceutical executives and top health care executives. he already has their support. the other number that people are going to be watching in the cbo
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report is not just how much it will cost but how many people will lose health care insurance. the are a lot of moderate republicans up for reelection in 2018 who do not want to be campaigning on folks losing coverage. vonnie: this is definitely a midterm issue. there has been a lot written about the different approach from the democrats whether it is in the senate or the house. one offense -- one approach is going on the offensive. the other is to be a little more defensive. do democrats have any say over if this legislation will be repealed? does it only come down to republican senators and representatives? not think the democrats have much leverage in this particular fight. earlier today, president trump tweeting that he said he would unify this republican party. that is at odds with what i'm hearing from conservatives inside the party. an id has you that
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been floated from a senior aide that perhaps they would split off medicaid into a more piecemeal approach. the administration feels that president trump campaigned on this. this is something he fought for heavily on the campaign trail. he is going to take it directly to the people. he is going to use the power of the bully pulpit in this campaign style events. leader this week, he will be outside of nashville, tennessee where he will hold a major rally. over the weekend by vice president mike pence who went to kentucky where senator rand paul is from as long -- along with senate majority leader mitch mcconnell. they are definitely doing a full court, offense is approach in trying to -- offensive approach in trying to unify this republican party. mark: kevin, president trump signs a new executive order comprehensive "a plan for reorganizing the executive branch." what is this plan?
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kevin: he wants to streamline and make the government more efficient. it is going to be coupled with an executive action we saw a couple of weeks ago in which he said he wants to have each of the departments and agencies to submit reports to see whether or not they can be more efficient. this was something, again, that his administration officials feel plays well and to of his political strengths. someone who is an effective business leader. all of that will hopefully fit with what they feel and get them back on offense. the budget is getting released later this week. he is meeting with angela merkel weather permitting tomorrow. we are still awaiting the cbo report. a busy week for this administration on how they will move forward. vonnie: in fact, there are other sort of foreign policy things on the agenda such as trump sending an envoy to make with netanyahu
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-- to meet with netanyahu. also some domestic banks such as a meeting with detroit automakers. will commission standards be rolled back? >> that is what the auto industry would like to see. campaigns in nashville, tennessee about health care, he will make that stop in detroit to meet with automakers. let's not forget about the qatari estate rex tillerson who is watching his tour through asia and -- secretary of state rex tillerson who is launching his tour through asia and the south pacific. mike allen reporting earlier this morning that some chinese will be with president trump at mar-a-lago in the coming weeks as well. vonnie: kevin, thank you. chiefas bloomberg's washington correspondent on capitol hill. coming up, we will get more into the new health care bill with
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douglas egan, the former director of the congressional budget office. the office is repairing -- preparing its support -- it's report on that health care bill. raphael bostic has been named as the new president. he is a current professor at the nursery of southern california. foras assistant secretary housing and urban development during the obama administration. europe, scotland's leader wants another referendum about independence from the u.k. they say scotland would like to say part of the -- state part of the european union, but a compromise has been brick walled by theresa may. clears, they say there will be another vote for independence. that could happen next year.
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working to help create jobs and avoid -- in decreased tax avoidance. they say adding a value added tax would be neutral to the budget. global news 24 hours a day, powered by 2600 journalists and analysts in more than 120 countries. i am emma chandra. this is bloomberg. mark? mark: coming up, we will hear what nobel prize-winning economist michael spence told bloomberg about the prospects of keeping your united. the netherlands get ready to go to the polls. this is bloomberg. ♪
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>> president trump has made it clear he does not agree with multilateral decisions. he wants to do it bilaterally. do you think angela merkel could persuade him to move towards her? x i am not sure. that is part of the uncertainty
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we all face. i hope so. >> michael, what is at stake from angela merkel's point of view? is there growth going in europe?
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how vulnerable isn't germany and europe more broadly to the new trade policies for the trump administration? >> europe is somewhat vulnerable. i think the principal vulnerabilities in it europe have to do with the differences between the north and the south to be completely honest. trump's policies are likely to cause the dollar to be strong. that is unbalanced -- that is on balance and official to europe.
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what does that really tell us about the sustainability of the eurozone as it is now configured? in the dots election, the issue was mainly sovereignty as it was to some consent -- extent in britain. those are sort of non-economic overlays on this. not -- isthe issue is
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nationalism. there is a significant part of the population that is starting to feel the pinch of globalization and other major trends. the pundits say on this round that madame le pen will not win, but what -- once one of these parties and enough ground to take control of the government, they are anti-eurozone. i think we are talking about longer-term risk rather than a short-term. i do not think the netherlands would take the eurozone down.
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>> i do not think you can sort of to this up forever. mark: nobel laureate michael spence on bloomberg earlier today. vonnie: still ahead, the latest on intel's plan to buy mobile light for about 15 billion u.s. dollars. later in the hour, we get more insight on the plan to replace obamacare from the former director of the congressional budget office. this is bloomberg. ♪
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♪ mark: from london, this is "bloomberg markets." i am mark barton. vonnie: in new york, i am vonnie quinn. just been pushed close to 2017 highs. abigail doolittle has a look at why they are doing this. week of we have the big central-bank meetings. as vonnie pointed out, we have a 10 year yield backing up represented in red. bonds are selling off. in the past 11 trading sessions, 10 of those sessions have been higher. that tells the bonds have been selling off on the expectation that the fed will be raising rates. this is not in isolated expectation. , thislook in a bloomberg is the fed fund rate in white.
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we have now moved up to three rate rises a year. the expectation is they will happen sooner as opposed to later. investors and economists are really thinking that the fed is in a tightening cycle at this point. this is part of the reflation trade out of the election. the idea that growth is going to be stimulating inflation. there are some risk assets not really going along with this right now -- the commodity complex. the 10 yearave yield, and in what we have the bloomberg commodity index. you can see the bloomberg commodity index is down about 4% from that peak back in february. it is being dragged down by oil. the question is whether or not this is some kind of tell that the reflation trade is splitting. it is interesting to see that not all asset classes are on
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board for that reflation trade. had a guest we speaking on the early on. check out the interview. , we have thers bloomberg business flash. a look at some big news right now. it big acquisition today and good news for self driving cars. i.el is set to buy mobile her present a 34% premium to their close on friday. alertske software that cars to the vestry and. be sure to catch our interview with intel's ceo coming up at 12:45 new york time. 4:45 london time. equity partners has agreed to buy canadian financial services providers. 3.6 million for
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dollars. they have tried to conform themselves into a -- ford will start producing its upscale lincoln brand. that will be in china in 2019. it will be jointly made with chinese partners. link in sales almost tripled in china last year. it would help ford avoid import taxes in the world's largest auto market. that is your business flash for this hour. mark: check out how european equities are faring. we are close to the end of the monday session. for the fourth consecutive day. it has been a massive week for central banks around the world. this is bloomberg. ♪
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vonnie: mark: let's check in our -- m a chandra has more from
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new york. may meet a soon as next month according to a ministry official. the two will meet at the president's mar-a-lago resort in florida. germany just chancellor angela that churchy spokesman told reporters the believesovernment protectionism is not a path to global growth. he said merkel and the president with discussed locational training. a new poll says 55% of french people are afraid of far right provigil candidate marine le pen. >> >> emma new york city may get 20
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inches. gust 50e expected to miles per hour. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries, this is bloomberg. mark: the dollar may have been headed toward a rough ride. some of the biggest asset managers are forming a 16th century theory to answer a question. what is the dollars true value? theories?th century we level bit of that. thomas: you need to have some measure of how expensive it is for the dollar or how cheap it is. there are several measures.
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are below the 16th century. this is just one price. been more really has expensive. we came out about time where a lot of people are buying. about it. huge doubts this is a time in history, but the 80's. it's not that we never see these. and we don't care if it's from the 16th century or ntil very recent.
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threethey are thinking rate hikes ahead of the meeting. is there much scope for upside after this meeting? thomas: i guess not. this rate hike is riced in any way. there are probably one or two other ones at the end of the year. that is also priced in. the critical element would be if take it thiss to is where the rate hike is going to win a couple of years. will the rate be around zero? do they go for something more high-yield?
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that is critical for the currency. not the timing issue. only two, it is next year. bonnie: i am curious how you measure the value of the dollar. ,f you look at the bloomberg it's not overvalued or undervalued. not especially in relation to the other majors. if you look at the effective exchange rate, it is a couple of percents overvalued. how are you measuring this? thomas: we are looking at producer prices in europe and in the u.s.. this is a time of 30 years roughly.
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also how theat is prices have changed over time. then we come to the conclusion that it should be around 124. current one.he it has produced prices. we have data on goods that are more easily tradable. we have health care, transportation, so on. getie: what happens and we different trade agreements in the next three or four years, even if it takes that long? we are depending on the
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agreement that there is some rising dollar. taxes involved. hand, the rising dollar will not need any counter affect. is the dollart appreciates so strongly over the last couple of years. this means if the dollar should be appreciating to tax adjustments or other things. rebalance to this dollar rally. we think it is much more limited than it usually would be. abouti want to ask you
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the pound. it is rising. that may surprise some people. scotland is pushing for another referendum vote. how should we be positioned ahead of the likely triggering of the article 50 sometime this month, maybe even tomorrow some are suggesting. is granted.tility i don't know what is causing the volatility. many details on what is the plan for the next two years. issues.e management it could beson, that with the triggering of the article 50 there is some disappointment on how legal information is together.
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we could see the pound falling a little bit. things will become clear. we would expect the pound to regain value, in particular against the u.s. dollar. toward 120 or maybe even 118. there are interesting things to look at and by in the u.k.. euroe other side, if the pound would come down toward 85, that would be an interesting rather than the pound in case the pound would appreciate versus the euro and other currencies. mark: as interesting as this was on thursday, what has come out since the meeting that grabbed
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our attention, bloomberg wrote that story on friday, the ecb discussed raising rates before qe ends. is this euro positive, this type of story and a less dovish ecb? thing: the most important is that the worst is probably behind just. that is how we rate the meeting. this allows us to do this on friday. also, the comments over the week concerning rate hikes before the end of tapering certain bills, in particular the rate hikes ease tension on the banking.
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this issue, it is already helpful. in the past, we've heard from mariota rocky -- mariota draghi. mark: it's great to see you. he has had of fx research. we are goingg up, to get more on this, more insight on the proposal to replace obamacare. he is the former director of the cbo. president trump is hosting a listening session at the white house. he says it will not be a one-size-fits-all plan. there will be less regulation to bring down costs. this is bloomberg. ♪
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mark: live from martin -- london i am mark artan. vonnie: the congressional budget office will release bindings of the cost of the american health care act, sending republicans on the offensive as they look to pass their bill. us to discuss this is the former can -- director of the cbo. said it was one of his favorite jobs. douglas: it's a great job. i loved it. ramy: vonnie: it's almost like a bank stress test. there are minimums and maximums.
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douglas: the primary objective is to tell the congress what are the implications, what the impacts on revenue going in and out of the treasury of any legislation they are considering. that's the primary job. to do that, you have to dig underneath an answer the question how may people will have health insurance. there is a lot of analysis underneath what is a single number. mark: where do you start? vonnie: the administration is vowing to keep taxes out of this , to take taxes out of this. how do you know then how many insurers we are talking about, how many insured we are talking about? douglas: you look at the research. what do we know about the behavior of people in these situations? you go ask the insurance companies, what products would
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you offer if these were the subsidies? if we did this change to medicaid, what would happen? they are going to have to talk to the states. the key part of this is to give states $10 billion a year. what they do with that will have a big impact on the premiums and coverage that occurs. how do you score for emergency room visits? douglas: you take a broad sample of the population and their data sets. you look at utilization over the course of a year. up to an that aggregate number. everybody has gone up since donald trump came resident, since we been getting more details. does that mean it's good for industry and bad for the individual? douglas: i think you will see
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that cbo come out with a budget number. the only thing that matters here consistent?ll that's the thing to check. at that point, all the supplementary information becomes attention. the risk is going to be a vigorous debate. different be researches what they think the coverage numbers will be. vonnie: everything i've seen points to they won't make it. i suspect they will. have been working with the cbo for months most withy, exchanging drafts the staff and scene where they think things are. by the time you get to this stage, there should not be a lot of surprises. vonnie: they have to come up with costs. you were appointed under a
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republican president. you've looked at some of these numbers. what is the longer-term cost? should it pass? does, it cannot be considered under reconciliation. it can't go in the simple majority in the senate. they'vebe sure that been drafted and talking to the cbo so that when they score it, they look at the first 10 years and passed the 10th year. they are lowering of the deficit. vonnie: talk us through it. how do you low the deficit? you're keeping the idea that 70 can stay on their parents plan. : do the reforms to medicaid. that is were they go for the money in this case. those are important not just for budgetary reasons.
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medicaid it has not delivered the quality of care for low income americans that many people wanted. this is the real opportunity, to give the states a chance to reform their programs and save money. vonnie: will people come off the rolls? douglas: i think that's going to be a contentious finding. this to risets 30%. most people would say that's not a realistic or cast of what's going on. they are going to be questioning whether you get the kind of drop off for this bill. vonnie: a lot of republicans say if you have to call it, will there be something found will please everybody? douglas: it doesn't change the politics. republicans have this tight rope from the conservatives in the house to the centrists in the senate. they are going to pass this with 218 votes in the senate -- house
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and 51 in the senate everyone is going to find something wrong with the bill. you think you will be a scheme by the end of the year? our thanks to you. mark: coming up, rarely has a dutch election garnered this much attention. we are going to check the freedom party as he checks to score another victory for populism. this is bloomberg. ♪
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vonnie: i am vonnie quinn in new york. mark: this is bloomberg markets. dutch voters are heading to the polls on wednesday. one candidate doesn't shy away
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from controversy. this is the bloomberg profile. >> he has been playing the long game. he has been in politics for 20 years and is making a move on leadership. with policies as shocking as his hair, he is riding a wave of nationalistic sentiment on both sides of the atlantic. this is our country and i will not be silenced by no one. manifesto.sed his zero asylum-seekers, a ban on mosques and the koran. why many of those who voted for brexit and trump, he has support from this in franchise people worried about their welfare. >> you cannot call it right wing or left wing. you could also say he is focusing on those who are less well-off.
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bloomberg government reporter in the netherlands. >> this is how an anti-islam firebrand grew to power in one of the most liberal countries in the world. he was born to dutch indonesian heritage, he traveled to israel in the middle east. he entered politics in the 90's. he was elected to city council in a muslim neighborhood where he claimed he was robbed. he commissioned the anti-islam film. he became a target for death threats and relieved -- received police protection. he's been taken to court numbers of times. the latest results were no sense. >> it looks like he has gained from being taken to court. he was basically blaming our judges, saying they were prejudiced. all of his supporters were
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standing trial. >> after centuries, the netherlands are a byword for religious tolerance and liberalism. this makes it more remarkable. >> stay away from us. you are not welcome here. >> he started leading in the polls and has employed smart tactics to push his platform. we are being threatened by mass immigration. >> he is very strategic with how he deals with the media. he gives one-on-one interviews so he does not show up with other politicians. he uses twitter a lot. says not afraid to controversial things. >> unable to campaign conventionally helped him in ahead of his opponents in an online platform. protectivehis terrier toe biggest
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him becoming prime minister may be himself. his single-minded style isn't compatible in the dutch political system where three party coalition governments have become the norm since world war ii. the majority of rivals of ruled out working with him. his chances of becoming the leader are minimal. the established parties are taking over. especially when it comes to immigration or islam. >> weather in power or not, he has had a forceful impact on dutch politics. mark: that was our profile of the dutch populist candidate. european equities are faring. we are 35 minutes away from the end of the monday session.
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gained for a fourth day, take a look at the currency board today. sterling is rising for a second day. that might surprise some given another scottish independence referendum vote is imminent. it could be up to two years away. we are finishing off with the bonds. we've got the yield on the u.k. 10 year. the closes next. this is bloomberg. ♪
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30 minutes left in the trading day. the europeanis is
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close on bloomberg markets. mark: from new york to london, plus cover stories from paris, amsterdam today. scottish first minister says she process fore legal a second referendum. we will sell you how markets are reacting today. intel snaps up mobile. of hsbc jump

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